Malta teases EU with new approach to relationship

MALTA certainly upset the apple-cartin 1996. While the citizens of central and eastern Europe strained at the leash to enter the Union, voters in Malta which was almost certain to be accepted into the club cocked a defiant snook at the EU last October by electing a party that rejected joining.

European Voice

1/15/97, 5:00 PM CET

Updated 4/12/14, 1:49 AM CET

Although Labour leader Alfred Sant would not characterise himself as anti-European, he insists that entry under present conditions would not be beneficial for his tiny island state.

This argument certainly convinced the Maltese electorate, a people whose independent spirit has grown from centuries of occupation at the Mediterranean crossroads.

But as the dust settles three months on, officials are trying to work out exactly what happened.

In some ways, the election result was misleading. A vote cast for Sant was not necessarily a vote against Europe, as the international press suggested in the days following news of the outcome. After all, a public opinion poll in October 1995 showed almost two-thirds of Maltese in favour ofEU membership, with less than a quarter against it.

But it was a vote against value added tax and the pain of former Premier Edward Fenech-Adami's economic reforms, which were undertaken specifically to prepare the country for Union accession.

While the Maltese would welcome the clout that association with the EU offers,they are clearly not willing to accept the side-effects of full Union membership especially of an EU forged by and for (mostly) considerably larger and more northern continental states.

Sant instead feels that any deal between Malta and the European Union should be tailor-made to his country's needs; marrying close political cooperation with free trade in certain areas only.

As a result, he put Malta's application on ice. What that actually means has caused confusion not only amongst journalists, but also amongst officials close to the Maltese government.

The emerging consensus appears to be that Malta has not officially withdrawn its application, but that it will not continueto pursue it as actively as it did under its previous administration.

Some commentators suggest that this gives Sant a free hand to start talks up again if the resultof the Intergovernmental Conference turns out favourably for the island.

"The Union after the conference may not be the same EU as now," said an official. "Sant could pursue membership yet."

THIS wait-and-see position, while certainly not unusual in European politics, might be interpreted as political opportunism.

But on balance it seems unlikely that Sant is acloset Union enthusiast. The structured dialogue between Malta and the EU has clearly ended, and there has been nothing in Sant's posture yet to suggest he will not live up to his electoral promises.

His big idea is the gradual creation of an industrial free trade zone, to be brought on- line some seven or eight years from now once Malta has restructured its manufacturing sector. That would be complemented by active participation in the Euro-Med initiative which could lead to a free trade zone over the next decade or so and possibly the EuropeanFree Trade Area (EFTA), according to Joseph Darmanin, president of Malta's chamber of commerce.

All of this is perfectly understandable. The Maltese fear that if they become full EU members, their agricultural sector will be smothered by the Union's farming might and that an influx of EU workers might endanger their low unemployment rate of less than 4%.

But in the run-up to the election, Fenech-Adami warned of disastrous consequences for foreign direct investment if the island turned away from the Union.

Darmanin is keen to quash such speculation. "We have not had any particularslow-down in attracting foreign investment not at all," he insisted.

The new administration is at the moment actively consulting interested parties over what steps it will take next. Perhaps the most significant indicator will be Sant's first fiscal budget, due at the end of April.

The new premier seems unlikely to reverse the Fenech-Adami economic reforms already in place, although he may slow down the introduction of new ones.

It is too early to tell how the international community will react to all of this, but the difference Malta's EU membership would have made should not be overestimated.

While formal accession would have consummated the relationship, the island is already extremely closely linked to the mainland.

"We are already integrated economically into the EU," says Darmanin, pointing out that 75% of all Malta's exports and imports are with the Union. "As its economies pick up, we are quite confident that they will have a positive effect on us as well."

In which case, Sant may have struck lucky by taking the helm during a period of globally rising prosperity, counteracting any negative impact his turn-around could have had.

As far as the EU is concerned, Malta's vacillations are interesting but far from economically crucial.

Although Malta is an island rich in symbols, long-viewed as the gateway between Christian Europe and the Islamic East, its material impact on Europe's fortunes is minute.

With less than half a million people, Malta has a smaller population than Luxembourg, is less than an eighth of its size (with three times the population density of the Netherlands), and an annual gross domestic product which totals less than each of the 'big four' EU member states make in a day.

This earns it the official title of micro-state, and although this would have been unlikely to keep Malta out of the Union, it was certainly something which would have kept administrators awake at night. Would Malta have had a Commissioner? Could it have ever coordinated a presidency?

Since accession negotiations with Malta were guaranteed to begin six months after the end of the IGC, these questions needed to be answered urgently.

Now that the Maltese heat is off, the micro-state debate could conceivably slip down the ladder of IGC priorities.

But neither should Malta's impact on EU reform be overestimated.

Cyprus' application will go ahead as before and the issue of small member states' rights versus those of the biggest members will continue to be important, given the prospect of EU enlargement to the east.

In the meantime, there will be no shortage of work for Giorgio Boggio, head ofthe European Commission's delegation to Malta. Foreign ministers, in the light of last year's election results, have tasked the Commission with preparing a report on all aspects of Malta's relationship with the EU.

Boggio explains that he will work closely with Malta's ministry of foreign affairs on this and foresees a busy time over the coming months.

Hopes are that the report will be ready by April, although Boggio says it is too early to tell.

From his vantage point, there has certainly been no substantial cooling in EU-Maltese relations since the election, but rather the reverse. "There is an eagerness to strengthen the relationship as never before," he said.

However, those who believe that it willjust be business as usual are deceiving themselves.

Malta is growing up and can no longer be taken for granted. Last year's election demonstrated a departure from the usual antagonism, even violence, inspired by national politics.

Its maturity is reflected by the new government's commitment not to swing immediately in the opposite direction to its predecessor, but to place financial stability at the top of its agenda.

It is also demonstrated in Malta's new-found confidence on the world stage. Sant is dedicated to maintaining his country's position at the crossroads between the European and Arab worlds, and has promised to move significantly closer to Libya and Tunisia.

EU leaders would do well to take note. The island, while clearly friendly towards Europe, has other allies as well.

History does not set a favourable precedent for those who forget this.